Morton L. Ginsberg v. Commissioner ( 2008 )

130 T.C. No. 7UNITED STATES TAX COURT
MORTON L. GINSBERG, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 11585-07L. Filed April 28, 2008.
P filed a complaint with District Court seeking
review of R’s determination to proceed with collection
of a trust fund recovery penalty. The District Court
remanded the case to R’s Appeals Office, which issued a
supplemental determination notice. The Pension
Protection Act of 2006, amending sec. 6330(d), I.R.C.
to expand this Court’s jurisdiction over sec. 6330,
I.R.C. determinations, became effective with respect to
determinations made after a date that fell between the
dates of the original determination notice and the
supplemental determination notice. P filed a petition
with this Court in response to the supplemental
determination notice.
Held: We lack jurisdiction to review R’s
determinations in the supplemental determination
notice. The supplemental notice relates back to the
original notice and is not a new determination for
purposes of the effective date of amended sec. 6330(d),
I.R.C.
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Neil L. Prupis, for petitioner.
Steven W. Ianacone, for respondent.
OPINION
KROUPA, Judge: This case is before the Court on
respondent’s Motion to Dismiss for Lack of Jurisdiction, filed
October 5, 2007. Petitioner filed a petition to review
respondent’s determinations in a supplemental determination
notice that petitioner is liable for the trust fund recovery
penalty for the periods ending June 30, 1991, December 31, 1991,
September 30, 1992, March 31, 1994, and September 30, 1994 (the
relevant periods). This issue arises because the supplemental
determination notice was issued after the effective date of the
amendment to section 6330(d)(1)1 and after petitioner had
originally filed a complaint with Federal District Court at a
time when only the District Court had subject matter jurisdiction
over the trust fund liabilities. We conclude that we lack
jurisdiction to review respondent’s determinations set forth in
the supplemental determination notice because we did not have
jurisdiction to review the determinations in the original
1
All section references are to the Internal Revenue Code,
unless otherwise indicated.
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determination notice. We shall therefore grant respondent’s
motion to dismiss for lack of jurisdiction.
Background
Petitioner is a real estate investor who controlled real
estate holdings through many partnerships and corporations. At
least five of the entities petitioner controlled accrued payroll
tax liabilities. Petitioner had a chief financial officer to
handle various financial matters such as tax liabilities. The
chief financial officer failed to carry out his duties and
embezzled funds from petitioner. Petitioner asserts that part of
the embezzled funds included the unpaid payroll taxes.
Respondent sent petitioner a Final Notice of Intent to Levy
on March 25, 1999, to collect trust fund recovery penalties under
section 6672 for the relevant periods. Petitioner requested a
hearing. After the hearing, respondent issued a determination
notice (the original determination notice) on June 20, 2003, in
which respondent sustained the proposed levy action for
petitioner’s liabilities for the trust fund recovery penalty,
among other things.
Petitioner disputed the original determination notice by
filing a complaint with the United States District Court for the
District of New Jersey (District Court). Petitioner could file a
complaint only with the District Court because the Tax Court
lacked jurisdiction over trust fund liabilities. The District
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Court remanded the matter to respondent’s Appeals Office and
dismissed the case in a consent order on October 5, 2005. The
District Court directed that upon remand, the Appeals Office
should consider petitioner’s challenges to the existence or
amount of the underlying liability. The consent order further
provided that petitioner’s rights under section 6330 would be
impaired in no way.
Respondent’s Appeals Office held a supplemental hearing with
petitioner. The Appeals Office issued petitioner a supplemental
determination notice on April 26, 2007, in which respondent
sustained the proposed levy action for petitioner’s liabilities
for the trust fund recovery penalty with certain adjustments.
Petitioner filed a petition with this Court contesting the
determinations in the supplemental determination notice on May
23, 2007. Petitioner resided in Florida at the time he filed the
petition. Petitioner also filed another complaint with the
District Court contesting the determinations in the supplemental
determination notice.
Respondent filed a motion to dismiss this case for lack of
jurisdiction. Respondent asserts that the supplemental
determination notice is not a new determination and that
jurisdiction remains with the District Court. Respondent argues
that the District Court has jurisdiction notwithstanding the
amendment to section 6330(d) giving the Tax Court exclusive
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jurisdiction over all section 6330 determinations made after
October 16, 2006.
Petitioner states in his response to respondent’s motion
that he filed simultaneous suits in this Court and with the
District Court because he was uncertain about which court had
jurisdiction after the amendment to section 6330(d).
Discussion
We now consider whether we have jurisdiction to review
respondent’s determination in the supplemental determination
notice. This is the first time we have been asked to consider
whether we have jurisdiction to review a supplemental
determination notice where the amendments to section 6330(d)
giving us exclusive jurisdiction became effective between the
issuance of the original determination notice and the issuance of
the supplemental determination notice. We begin by explaining
the scope of our jurisdiction under section 6330 and Congress’
recent expansion of that jurisdiction.
A taxpayer must receive written notice of the right to
request a hearing before the Commissioner may levy upon any
property or property right of the taxpayer. Sec. 6330(a). If
the taxpayer requests a hearing, an Appeals officer holds the
hearing and then makes a determination. Sec. 6330(b)(1), (c)(3).
The taxpayer may seek judicial review of the Appeals officer’s
determination within 30 days of its issuance. Sec. 6330(d)(1).
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Tax Court Jurisdiction On or Before October 16, 2006
This Court is a court of limited jurisdiction, and we may
exercise judgment only to the extent authorized by Congress.
Naftel v. Commissioner, 85 T.C. 527, 529 (1985). Before the
enactment of the Pension Protection Act of 2006 (PPA), Pub. L.
109-280, 120 Stat. 780, the Tax Court had jurisdiction to review
an Appeals officer’s determinations only in those cases where the
Tax Court had jurisdiction over the underlying tax liability.
Callahan v. Commissioner, 130 T.C. ____, ____ (2008) (slip. op.
at 2-3); Zapara v. Commissioner, 126 T.C. 215, 227 (2006); Katz
v. Commissioner, 115 T.C. 329, 338-339 (2000). The Tax Court
lacks jurisdiction over trust fund recovery penalties in
deficiency cases. Moore v. Commissioner, 114 T.C. 171, 175
(2000); Medeiros v. Commissioner, 77 T.C. 1255 (1991).
Accordingly, we could not review the Commissioner’s
determinations to collect this type of tax until the PPA became
effective for determinations made after October 16, 2006. PPA
sec. 855, 120 Stat. 1019; see Rustam v. Commissioner, T.C. Memo.
2005-42.
Tax Court Jurisdiction After October 16, 2006
The PPA expanded our jurisdiction to include review of the
Commissioner’s collection activity, regardless of the type of
underlying tax involved, for determinations made after October
16, 2006. PPA sec. 855; Perkins v. Commissioner, 129 T.C. 58, 63
n.7 (2007). Accordingly, we now have jurisdiction to review all
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appeals of collection determinations made after October 16, 2006.
Callahan v. Commissioner, supra.
Determination Notices and Supplemental Determination Notices
The supplemental determination in this case was made after
the effective date of October 16, 2006, but the original
determination was made before the effective date. Petitioner
appealed the original determination to the District Court, and
the District Court remanded the case to the Appeals Office. This
case presents the unique situation where the effective date of
the PPA falls between an original determination notice appealable
to District Court and a supplemental determination notice.
A taxpayer is entitled to only one notice of intent to levy
and only one hearing per taxable period. Sec. 6330(a)(1),
(b)(2); see also Drake v. Commissioner, T.C. Memo. 2006-151,
affd. 511 F.3d 65 (1st Cir. 2007). A hearing under section 6330
may consist of one or more written or oral communications between
an Appeals officer and the taxpayer. Sec. 301.6330-1, Proced. &
Admin. Regs. Taxpayers do not have a right to any further or
additional hearing. H. Conf. Rept. 105-599, at 266 (1998), 1998-
3 C.B. 747, 1020. Any further hearing that a taxpayer has is a
supplement to the initial hearing, and the two hearings together
constitute the hearing under section 6330(d). Drake v.
Commissioner, supra (citing Parker v. Commissioner, T.C. Memo.
2004-226).
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It follows that this hearing, which may actually consist of
several meetings or other written or oral communications, yields
only one determination. See sec. 6330(c)(3), (d)(1). This
determination may be supplemented by a supplemental determination
notice, if the matter is remanded to Appeals after the initial
determination. The supplemental determination notice is merely a
supplement to the original determination notice and relates back
to the original determination notice.2 It is not a new
determination and does not provide the taxpayer any additional
appeal rights.3
We conclude that the supplemental determination notice
relates back to the original determination notice dated June 30,
2003. As the original determination notice was issued before
October 16, 2006, we do not have jurisdiction to review
respondent’s determination because we lack jurisdiction to review
the underlying tax liability. See Moore v. Commissioner, supra
2
The Office of Chief Counsel at the Internal Revenue Service
(IRS) has issued a Notice providing guidance to IRS personnel in
situations like this one. Chief Counsel Notice CC-2007-001 (Oct.
13, 2006). The Notice states that the District Court has
jurisdiction because the supplemental determination notice
supplements the original determination notice.
3
We also decide today Kelby v. Commissioner, 130 T.C. ___
(2008), holding that the determination we review is the original
determination notice as supplemented by all subsequent
determination notices, and that the original determination notice
is rendered moot to the extent supplanted by the subsequent
determination notices. If we do not have jurisdiction to review
the original determination notice, however, the issuance of a
supplemental determination notice does not give us jurisdiction.
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at 175. We shall therefore grant respondent’s motion to dismiss
for lack of jurisdiction.
To reflect the foregoing,
An appropriate order of
dismissal for lack of
jurisdiction will be entered.